Changes in Economic Outcomes Before and After Rural Hospital Closures in the United States: A Difference-in-Differences Study
OFH Contributors
Key Takeaways
Rural hospital closures were linked with a drop in health care jobs in those communities, but not with wider changes in overall local economic measures like income or unemployment.
Many counties that later lost hospitals were already experiencing economic decline before closure, suggesting closures may reflect existing economic distress rather than cause it outright.
The findings imply that health care institutions and local economies are deeply interconnected, but hospital closures are often a symptom—not just a driver—of broader rural economic challenges.
Executive Summary
Introduction
Rural hospitals play key roles in their communities, providing both health care and serving as major local employers. Over the last two decades, dozens of rural hospitals in the United States have closed, raising concerns about potential damage to local economies. This study examines whether counties that experienced a rural hospital closure between 2005 and 2018 saw measurable changes in economic conditions—including unemployment, income, total jobs, and labor force participation—relative to similar counties that did not lose a hospital.
Main Findings
- The one clear economic change after a rural hospital closure was a significant drop in health care sector employment—about a 14 % decline in health care jobs in counties that experienced closures versus counties that did not.
- In contrast, overall unemployment rates, total jobs, per capita income, population size, disability program participation, and other broader measures did not show consistent changes that could be attributed directly to hospital closure.
- Importantly, many of the counties that lost hospitals were already experiencing adverse economic trends (declining job markets, falling incomes, etc.) before the closure occurred, suggesting that closures often happen in places already struggling economically.
Conclusion
This study suggests that while losing a rural hospital can reduce health care employment, it does not by itself appear to drive large shifts in broader county economic conditions. Instead, rural hospital closures frequently occur in places already facing economic challenges. Understanding the economic consequences of hospital closures therefore requires looking not just at the event of closure itself, but at the underlying economic conditions of rural communities. Policies aimed at strengthening rural economies and hospital viability may need to focus on broader community economic supports rather than hospital preservation alone.
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